Mathematically, there is a 100% probability of a sovereign debt collapse. Its progression: starts in the PIIGS… Italy defaults, spreads to the rest of Eurozone, UK and Japan and finally USA. The Euro, UKP, JPY and USD are toast! For total debt (ie. public + private) to GDP ratio, see also: The World’s Biggest Debtor Nations – CNBC .
–Do the Mathsby Puru Saxana, http://www.purusaxena.com/BIG PICTURE – Let’s face it; many of the world’s ‘developed’ nations are insolvent and the writing is on the wall. Either these indebted states will default or they will try and inflate their currencies into oblivion. – As far as the US is concerned, it still has the privilege of owning the world’s reserve currency and its central bank can always create more dollar bills out of thin air. Thus, it is unlikely that the US will ever default on its debt obligations. – Unfortunately, thanks to the brilliant invention of the single currency, the European states do not have the luxury of printing or debasing their currencies. Accordingly, their hands are tied and they are now at the mercy of their foreign friends. Make no mistake, the Greeks, Portuguese and the Italians simply do not have the choice of printing drachmas, escudos or lire. Therefore, unless their creditors accept some big haircuts on their loans, sovereign defaults are inevitable. – Politicians can lie all they want, but the truth is that the debt obligations of these European nations are simply too large relative to the size of their economies. In Greece, government debt now represents almost 160% of GDP and the average yield on Greek debt is around 15%. Thus, if Greece’s debt is rolled over without restructuring, its interest costs alone will amount to approximately 24% of GDP. In other words, if debt pardoning does not occur, nearly a quarter of Greece’s economic output will be gobbled up by interest repayments! Looking at this simple maths, it is obvious to us that unless the Germans or the French comes to its rescue, Greece will default within 2-3 years. – Figure 1 captures the sorry state of affairs in Europe and highlights the continent’s huge debt overhang. Topping this infamous list is Greece and as you can see, Italy, Ireland, Portugal and Belgium complete the top five slots. Moreover, it is interesting to note that only five member states have abided by the EU Stability Pact’s debt ceiling of 60%! – In our view, Greece’s economy is small enough that the Germans and/or the French may pick up the tab. So, we are not especially concerned about an immediate sovereign default by Greece. – Unfortunately, the Italian economy is a whole lot bigger and its government debt comes in at a staggering Euro 1.9 trillion (US$2.7 trillion). At the time of writing, the 10-year Italian bond yield has jumped to 5.76% and if it continues to rise, elementary maths tells us that Italy will have a serious problem on its hands. It is noteworthy that the recent surge in Italy’s bond yields will increase borrowing costs, which the government estimates will total Euro 75 billion this year or nearly 5% of GDP. According to our estimates, if the average interest rate on Italy’s debt rises to 6% by 2014, annual financing costs will jump to Euro 110 billion or almost 7.5% of GDP. – Given the sheer size of the sums involved, it is highly unlikely that the German and/or the French citizens will allow their governments to pick up Italy’s tab. Thus, it is our contention that Italy will ultimately prove to be a bigger nightmare than Greece. Nonetheless, we suspect that any sovereign default will not occur anytime soon. Instead, some of the troubled European states will default towards the end of the next big bear market, which seems to be several months away. – Across the pond, the government debt in the world’s largest economy has climbed to US$14.34 trillion … and equates to almost 96% of GDP! – At present, most of this debt is of the short-term variety and thanks to record-low interest rates, it is being financed cheaply. Therefore, with artificially suppressed short-term rates, financing the US debt is not a problem just yet. However, if inflationary expectations rise and rates appreciate significantly, this debt will have to be refinanced at higher and higher yields. When that happens, the average weighted cost of capital will rise, pushing up borrowing costs to intolerable levels. At that point, a much greater chunk of America’s future output will be used up for interest repayments, thereby exerting additional pressure on the economy. – When the interest payments on US debt become painfully high, Mr. Bernanke will be called upon to unleash the hyperinflation genie. Ifour assessment is correct, before Mr. Bernanke really unleashes the money creation machine (yes, we have not seen anything yet), the US government will probably dramatically lengthen the maturity of its debt. By fixing its own long-term borrowing costs in advance of the great inflation, the US government will escape the wrath of surging market interest rates. – Look. Whichever way you cut it, the maths simply does not add up. Given the massive debt pile and sluggish economies of the developed world, it is obvious to us that debt restructuring is the only viable solution. If the West wants to avoid economic Armageddon and/or hyperinflation, debt pardoning must commence without further delay. The creditors and bondholders must accept their losses and take haircuts on their loans; otherwise, they will eventually be repaid in worthless money! – The trouble with debt restructuring is that it will wipe out banks’ equity and the contagion will cause many financial institutions to go bust. Furthermore, debt restructuring or defaults will trigger billions of dollars of payments on the credit default swaps which were also issued by the same banks! So, you can see why the banking elite (in conjunction with the politicians) are desperately trying to avoid the inevitable. The truth is that the banking elite do not want to take the losses and they would rather shove more debt down the throat of the troubled states. After all, they print the currencies, so handing out a new loan is not a problem. What they do not want to see is debtors walking away from their obligations, because such a scenario will expose the banks’ insolvency. Figure 3 shows the exposure of the major European banks to the peripheral economies and as you can see, it is not a pretty sight!
–…. for the full article click here!

A sovereign debt collapse will lead to a financial/banking system meltdown!

Gold is a calamity indicator! It is saying worldwide currency debasement. It is saying the financial and monetary system is in deep trouble. We are heading towards a global economic, financial and monetary collapse!
–

The amount of Interest Rate Swaps derivatives (insurance against interest rate rising beyond a certain level) is anywhere in the region of US$200-300T. And it is controlled by the Illuminist banksters. Should the bond market collapse and interest rates rise precipitously, it will cause the collapse of the banking/financial system via Interest Rate Swap derivatives!
–

Listen to what pros like Jim Sinclair and Stewart Thomson say. They are experts and people close to the ground observing the real situation. The Illuminist banksters want to drive the world to their One World Government, One World Currency and Global Supra-National Central Bank. Gold is your protection against the coming collapse! Got gold yet? (emphasis mine)
–This is it!by Stewart Thomson, http://www.gracelandupdates.com/1. A maniac is dictionary-defined as a person who is either a raving lunatic or overly-zealous about something. For example, a person could be said to be maniacally obsessed with… details. –2. I’m overly obsessed with silver and gold stock details right now. I’m obsessed with the mountain of buy orders I have in the market for silver bullion, and for gold stock. For example, as of this morning, for silver, my buy orders are now every 10 cents down.
–3. I labelled the $1462-$1478 price lows for gold as the “zone of doom”, because 93% of gold analysts were documented as bearish at the time of those lows. I spoke of the gold stocks gulag, and that phrase summed up the horrors endured by long time gold stock investors. I spoke of enduring your way to victory. – 4. Click here now to view why you endured the gulag. Party time is here. Rocket launch time is near. That’s a nice rhyme, and a nicer reality. Congratulations to all gold stock astronauts for staying in the space ship, rather than running to mommy at the photocopy machine.
–
5. The weekly GDX chart shows an epic volume bar. The bottom line is that gold bullion has set up GDX…. to literally blow the doors off the US dollar. You thought you were in a gulag, but it was a spaceship on the launch pad. Welcome, champions, to the real world! – 6. Some seemed to go into physical shock as gold went near-vertical from $1478, when it was supposed to roll over dead, according to their summer doldrums kiddie script. I’ve labelled this $1478-1910 move in time and price as the pre-parabola zone.
–
7. Most analysts, and investors, are trying hard to call a short term top on gold, and are labelling this area as extremely overbought. My question is, “is that really relevant, here and now, in the greatest economic crisis in world history?” – 8. You need to look in the mirror and ask yourself why you’re here, as a card-carrying gold community soldier. In the parabola zone, there are going to be the biggest hits on gold yet, and they are impossible to predict. If I blow up some egos, I apologize, but you need to ask yourself if you want to predict what cannot be predicted, or if you want to get richer. – 9. I believe silver has a head and shoulders base pattern on it that is 30 years in size, and a break-out is imminent. That’s why I’m buying silver every 10 cents down. Not here or there. Every 10 cents down. I’m not looking for “strategic entry points”; I’m mauling the market with buys. – 10. Click here now to view the greatest base pattern in the history of markets! – 11. How high can a 30 year head and shoulders base pattern propel the price of silver? I don’t know, but this price pattern is arguably the largest base pattern in the history of markets, and the question is, are you onside?
–12. The tactical approach to operating in the parabolic zone is to tone down, substantially, your analysis of where price is going, and tone up your response to what actually happens. In terms of size, you need to sell like a bird on strength, and buy like an elephant on weakness. – 13. Europe is burning, the dollar is burning, and governments are burning. Elmer Fudd Public Investor won’t have any stock market investments by the time the final bell rings on this, the big show. He’s going to make the people in the 1930’s breadlines look like they were in the party zone! The bottom line is that the big picture is going out of control and ushering in the gold parabola zone. – 14. Martin Armstrong talks of hedge funds betting on the demise of European “virtual currencies”. He argues that national government bonds are being shorted by the fundsters as though they are national currencies of those nations. He worries that unless national debts are consolidated into a single Eurobond issue, dictators could arise in nations like Greece. These nations can’t devalue their currencies, and the market is devaluing their bonds like they are currencies going off the board!
–
15. I’ll add that the euro horror show playing out before your eyes now, gives you a glimpse into the supreme gulag being planned for you by the banksters, with their one world government/one world currency scheme. They know the horrors it will bring to you, and plan to use those horrors to enrich themselves, all the way to the quadrillionaire zone. Yes, maybe it is a good idea to get your hand off that gold top calling button, now. – 16. Maybe it’s also time to give the tick chart technical analysis of the gold market a bit of a rest, and enjoy the ride! Don’t do to yourself in silver and gold stocks, what many have done to themselves in gold bullion already, with their failed top calls. While others talk about how low silver and gold stocks might go if the Dow crashes, I’m sucking up silver every 10 cents down, without a single missed buy. Have you missed any buys? Well, please miss some more, because that’s just more silver for me. Thanks! – 17. The price hits on gold and its blood relatives, in the parabola zone, are going to be ultra-sharp, ultra-short, and ultra-unpredictable. Note that word, “unpredictable” and keep it in mind before pressing your gold top call button. Most of you have no idea how fast the gold punisher can leave you in dollar dust, in the parabola zone.
–
18. I expect gold to rise by an average of $100-$200 per day, silver by $3-$5 per day, and GDX by $5 per day, as the OTC derivatives–loaded US T-bond market implodes, in the greatest financial fireball in the history of markets.
–19. The stratospheric price point implications of the base pattern in silver are a direct indication of the size of the interest rate OTC derivatives horror. The bond market is not a safe haven. It’s a time bomb, and the banksters are making their way towards it now, with fuses and lighters. Are you sure you want to play gold top caller here? – 20. Are you sure that an OTC derivatives interest rate fireball that causes the total destruction of the American government bond market is really a reason to top call gold today? Maybe you can time your way through the coming implosion of the bond market. I say all the timers will look like microscopic glow worms, by the time the banksters finish with them. – 21. This is it! We’re on the edge of the gold parabola and, horrifically, most investors seem to be trying to top call themselves ouThis is it! We’re on the edge of the gold parabola and, horrifically, most investors seem to be trying to t of gold, and onto the breadline, alongside Elmer Fudd Public Investor! My suggestion, instead, is to stay strong. Sell like a bird. Don’t plop into silver or gold stocks. Buy consistently like a machine, on all weakness, with risk capital you can reasonably place. Most investors have no clue how bullish for gold the implosion of the bond market is, and the time is near. I think an event in Europe lights the whole interest rate OTC derivatives garbage dump on fire, but it could be any trigger. – 22. The Dow is almost out of control. The dollar bear market is on the verge of going out of control. The term “out of control” is the key driver of the gold parabola. Look around you, ladies and gentlemen, and you tell me while you have your finger on the gold top call button… are you doing, really, the right thing? I say that it’s the buy button you need to be focused on, and my strongest suggestion to you is that you don’t learn this key fact, the hard way!

At the top echelons of intelligence agencies like Mossad, MI5/6, CIA … are Illuminists. These are really Illuminist owned and controlled intelligence agencies. They do not serve the sheeple public. The people at the lower rungs in these agencies do not really know what is going on. They are deceived useful idiots blindly following orders! The war against Libya is an illegal act of aggression masquerading as a humanitarian mission.
–

Al Qaeda is a creation of the CIA. It is really a psyop marketing phrase use as the bogeyman for their Global War on Terrorism fraud. Osama Bin Laden and his group of fighters were trained, organized and financed by the CIA in the late 70s, early 80s to fight against the Soviet empire. They are a wholly owned CIA asset of terrorists/mercenaries!
–MI6 Directed Rebel Terrorists In Tripoli Siege!by Paul Joseph Watson, www.Infowars.comEven as the establishment media continues to portray the rebel assault on Tripoli as some kind of organic uprising, it has now been admitted that British intelligence played a key role in directing the siege, and in doing so continued their long-standing relationship with Al-Qaeda terrorists.–“MI6 officers based in the rebel stronghold of Benghazi had honed battle plans drawn up by Libya’s Transitional National Council (TNC) which were agreed 10 weeks ago,” reports the London Telegraph. “The constantly-updated tactical advice provided by British experts to the rebel leaders centred on the need to spark a fresh uprising within Tripoli that could be used as the cue for fighters to advance on the city.”–The MI6-orchestrated raid on Tripoli was preceded by bombing runs by RAF fighter jets over the weekend that targeted key Gaddafi communications facilities. As Webster Tarpley reported, NATO then shipped in terrorists to lead the Mumbai massacre-style assault which led to over 1,000 deaths.–British Special Forces were on the ground in Libya before the UN “no fly zone” resolution was even announced earlier this year. SAS agents were directing rebels having landed at the end of February along with French and American Special Forces operatives. Westerners were later caught on camera fraternizing with rebels by an Al-Jazeera film crew.–This would by no means by the first time British intelligence has worked directly with Al-Qaeda terrorists in a bid to topple Colonel Gaddafi. In 2002 French intelligence experts revealed how MI6 paid a Libyan Al-Qaeda cell, the Islamic Fighting Group, $100,000 to to assassinate Gaddafi.–At around the same time, British intelligence also thwarted an Interpol arrest warrant for Osama Bin Laden that was issued by Gaddafi, in a bid to protect the Al-Qaeda group as it hatched the plot to kill the Libyan leader. The Islamic Fighting Group was led at the time by Anas al-Liby, one of Bin Laden’s trusted lieutenants.–The Libyan Islamic Fighting Group (LIFG) is one of the key Al-Qaeda factions now commanding rebel forces. As the Asian Tribune reports, the “Libyan Islamic Fighting Group (LIFG) (is) likely to emerge to become the real power behind any administration in post-Gaddafi Libya.”–So having trained, funded and equipped Al-Qaeda terrorists, Britain and America, while simultaneously claiming to be fighting a multi-generational “war on terror,” are now providing a home for the same Al-Qaeda militants who killed U.S. troops in Afghanistan and Iraq.

Photo: Taken overnight, Qaddafi’s son Saif Al-Islam “confirmed” to be captured and ready to be transferred to the Hague by the illegitimate International Criminal Court, is actually very much free and leading efforts to drive out NATO backed Al Qaeda thugs from Tripoli.

In war, truth is the first casualty! The western Illuminist owned MSM portrays Gaddafi as a unrepentent villain murdering his own people and with no popular support. This is utter BS. The majority of Libyans do support him and are fighting against the NATO invading forces and their Al CIAda allies! Note below the CFR (Council on Foreign Relations) linked organizations! The CFR is a low rung secular execution arm of the Illuminati!
–Libya: NATO Psy-Op Collapses – Qaddafi Prevails AgainBy Tony Cartalucci , The Intel HubNATO bluff called by Qaddafi, rebels’ victory facade crumbles.Once again a defiant Qaddafi has prevailed against the full might of NATO aggression including a murderous bombing campaign followed by NATO special forces on the ground supporting mobs of US/UK/French/Qatari backed Al Qaeda thugs which swarmed Tripoli over the weekend.–“Illustrious” news agencies from the Qatari government’s AlJazeera, to the now exposed frauds at CNN, BBC, Reuters, AP, AFP have been caught perpetuating a concerted war propaganda campaign in order to break the will of both Libya and in particular Tripoli.–Reports that Qaddafi’s son Saif Al-Islam was “captured” by Libyan rebels by the disingenuous media outlets and “confirmed” by the Fortune 500 contrived International Criminal Court (ICC), who went as far as saying preparations were already under way to transfer Saif to the Hague, are now confirmed lies with Saif Al-Islam very much free, appearing to journalists at the Rixos Hotel in southern Tripoli flanked by Libyan military forces and very much leading what appears to be a significant Libyan government counterattack.–It appears that NATO operations are ending just as they began, based on a verified pack of lies. (Please see March’s “Libya: Another War, Another Pack of Lies“) –Everything we have been told, from President Obama’s teleprompter readings to Luis Moreno-Ocampo of the ICC’s claims of Saif’s “confirmed” capture, to the mainstream media and the Al Qaeda infested “Transitional National Council” are now systematically being exposed as overt, verified lies as part of what may be the biggest psychological operation in modern history.–Al Jazeera who was already featuring lofty “The Last Days of Gaddafi” narratives is now forced to face reality and irrefutable evidence that the rebel operations in Tripoli were clearly over-hyped war propaganda and the reality is Qaddafi and the Libyan people have called NATO’s bluff.–To illustrate just how absurd the Western media has become as their lies break upon the rocks of reality, a recent farcical attempt to save face regarding Saif’s appearance before journalists at the Riox included an Al Jazeera report claiming that rebel leaders had confirmation Saif al-Islam was arrested “but have no idea how he escaped.”–To help out the media it might be suggested that Saif was never captured in the first place and that reports of his arrest were simply a ploy to embolden rebels and make it appear as if the momentum had swung in favor of NATO. (For more on US State Department lies rehashed through “media” please see: “Libyan Rebels Lying Left and Right“)–What follows next is unsure. With Council on Foreign Relations president Richard Haas and others calling for an expedient landing of NATO occupation forces it seems they above all others knew just how tenuous the rebels’ hold on Tripoli was.–As explained previously, the war in Libya goes beyond pilfering the nation’s material wealth, it is about establishing the Wall Street-London international order and its primacy over the nation-state. A NATO failure in Libya would infinitely complicate planned operations against Syria, Iran, and along Russia and China’s peripheries.–While it appears that NATO’s last ditch murder spree has failed, with so much on the table, everything from continuous carpet bombing to a NATO land invasion under the guise of UN “peace monitors” or Haas’ NATO occupation forces are possibilities already being planned.–What we do know is how desperate the corporate-financier elite are and how absolute their control is over the mainstream media. Such a large, wide scale disinformation campaign is only possible if each news agency, from AP, Reuters, BBC, Guardian, Telegraph, New York Times, CNN, Al Jazeera and others, are completely compromised by corporate-financier interests.–The following lists shows that indeed many of these “news agencies” share consortium memberships with some of the largest corporate-financier interests on earth presenting an immense conflict of interest obviously producing astronomically duplicitous improprieties.–Council on Foreign RelationsChatham House (Major Corporate Members)Chatham House (Corporate Members)Chatham House (Corporate Partners)Brookings Institution (page 20 of Annual Report)–When we see Reuters sitting side-by-side oil giants like BP, Exxon, Chevron within the halls of the Council on Foreign Relations and the Chatham House and then see reports gloating over Western oil companies moving in to replace Chinese and Russian investments in Libya, their duplicity and lack of independence in their reporting becomes glaringly obvious.–These media organizations are in fact PR fronts for the Fortune 500 and their collective goal of implementing a global empire, nation to nation. For now, they are currently obsessed over Libya and the implications its conclusion will have on their future planned conquests, the next being Syria.–… for the full article click here!

Image: Here, the International Criminal Court “confirms” the now verified lie that Saif Al-Islam was being held by rebels. ICC prosecutor Luis Moreno-Ocampo, in a fit of unmitigated lies claimed, “we have confidential information from different sources that we have within Libya confirming this.” He would continue, “it is very important to make clear there is an obligation to surrender Saif to the ICC in accordance with the Security Council resolution.” Along with UN Chief Ban Ki-Moon’s claim that the “international community” is obligated to comply to the ICC we see unfolding a criminal organization of liars and degenerates of unprecedented proportions.

Where did the FedRes get the trillions of dollars from? From thin air! They create USD from thin air to give it to their bankster friends, share holders and buy US treasuries. Easily 80% of treasuries are bought by the FedRes now. Americans are made to pay the interest on these treasuries to the FedRes and pay the full loan amount on maturity, when the money is all created out of thin air! It is all a SCAM !
–Banking Elites Stole $1.2 Trillion Thanks to the FED / Is Ben Bernanke Insane? / Biden Tells China “You Are Safe” by http://www.thedailybell.com/Wall Street Aristocracy Got $1.2 Trillion from the FEDFed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. … according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress. “These are all whopping numbers,” said Robert Litan, a former Justice Department official who in the 1990s served on a commission probing the causes of the savings and loan crisis. “You’re talking about the aristocracy of American finance going down the tubes without the federal money.” – Bloomberg
–Dominant Social Theme: Ben Bernanke and the Federal Reserve did what needed to be done to save the American banking system.Free-Market Analysis: $1.2 trillion loaned out around the world? Actually, the Federal Reserve fraudulently loaned or gave money to Anglosphere financial institutions, international corporations and even governments secretly and planned to keep this from the American public. The public will in reality pay for the free-money giveaway in higher taxes, cuts in services, economic depression and loss of prosperity.–If a thief breaks into your house and steals all the cash and gold in your safe deposit box but you aren’t aware of the robbery for a few years, did a crime take place? We believe the answer is yes.–Here is a link to the list of recipients: click here.–Bernanke May Have to Go for ‘Shock and Awe’“If the Fed really is going to go down the route of another round of unconventional policy making, I think they’ve got to go in for, what I called, shock and awe,” Russell Jones, Global Head of Fixed Income Strategy at Westpac Institutional Bank told CNBC on Monday….The recent stock market rout has already wiped out more than 10 percent from major indices. … “If we really are in trouble at the end of the week, I think they’ll have to respond,” Jones said. … Frankly, Bernanke and the Fed are desperately trying to keep a big secret from the American people. The US has been in a depression since 2009 with the collapse in real estate and the dollar. Only their manipulation of the stock market has kept the American people from seeing, in their portfolio and retirement plan statements, how bad the situation really is. – CNBC
–Dominant Social Theme: We must throw more money at the problem than we did with QE 1 and 2 to prime the pump and support the economy until something works out.Free-Market Analysis: Ben Bernanke is insane. Albert Einstein described insanity as doing the same thing over and over again and expecting different results. Yes, QE 1 & QE 2 helped to make the fake economic statistics a little better but at what cost in added sovereign debt and ushering in the dollar collapse while prolonging the depression?–The new “shock and awe” QE 3, 4, 5, 6, etc. will not end the depression. The result will be identical to QE 1 and 2.–While the Anglo-American elites could create a short-term solution with a major war, we suggest a return to free-market economic principles, an end to the Fed and the election of Ron Paul as president of the US in 2012. There is no reason for a military conflict with thousands of causalities just to get the economy moving and hide the mistakes of the Federal Reserve and Wall Street.–Biden: China’s U.S. Assets Are Safe Despite DowngradeBiden also made the case for continued U.S. economic vitality despite current budget woes and sought to reassure China’s leaders and ordinary citizens about the safety of their assets in the United States following the downgrading of America’s credit rating. “You’re safe,” Biden told students in a question-and-answer session following a speech at Sichuan University in the southwestern city of Chengdu.” – Huffington Post
–Dominant Social Theme: America is making real economic progress in controlling our sovereign debt problems. We just need more time to get our financial house in order.Free-Market Analysis: We always enjoy following Joe Biden as he plays his part as a “regular Joe” to perfection in the US and around the world. But behind the sound bites and humor, the US is playing a deadly financial game of “false promises” and “trust us” to a China demanding actions instead of word games. The US government is paralyzed and unable to do more than talk and delay the inevitable future default or inflationary solution to the American Treasury debt problem.–This is an interesting political game of chicken being played out by American and Chinese leaders at the highest levels. Who will chicken out first? Will China begin to dump American debt or will America start to inflate their sovereign debt away by inflation and dollar collapse. Either course of action will have the same outcome on both nations. The politicians involved or in power in both countries will be repudiated and the world will be plunged into an even more severe sovereign debt and currency crisis.–… for the full article click here!

YouTube:Ben Davies (http://hindecapital.com) and James Turk, Director of the GoldMoney Foundation, talk about the current fiat currency world monetary system established under “Bretton Woods II”. They explain the imbalances created by the hegemony of the fiat dollar, and how it allows mercantilist vendor financing and the accumulation of huge FX reserves in sovereign wealth funds and other vehicles. Ben Davies thinks that this system is close to the breaking point.–They talk about potential problems in China, and how the Chinese need to import huge amounts of raw materials in order to keep their economy growing. Davies and Turk also explain how China has more gold than they are admitting.–They talk about the economic outlook and how growth is slowing in the US and the EU as the sovereign debt crisis takes its toll. They discuss the probability of further rounds of monetary stimulus, be it QE3 or an equivalent. The two men also explain how this will result in a crack-up boom as described by the Austrian economist Ludwig von Mises. They both see gold as undervalued, but explain the problems of using dollar price targets because the fiat dollar is a changing yardstick. Ben Davies explains that money, like any other good, is affected by supply and demand, which set the price.–They talk about the potential for hyperinflation; Davies comments that hyperinflation is a political phenomenon, and that the conditions for it are in place in many countries. They see the rising gold price as a reflection of the flight from fiat currency into real goods and tangible assets.–They see gold breaking the $2,000 barrier this year and moving exponentially higher. Ben Davies explains that he uses a power-function model to analyse the price of gold, based on Benford’s law.–This interview was recorded on August 4 2011 in London.